Getting started as a new business: The Minimum Viable Product
Congrats! You’ve got a great business idea, and you’ve decided to take the plunge and start your business. If you’re new to the process of developing a product or service, it’s tempting to throw everything and the kitchen sink into a product, and launch with the best possible widget you can.
Paradoxically, this is not usually the best approach. Product development process can eat up a ton of resources in the early stages of your business. With your time and money at risk, it’s critical to strategize and determine the most efficient way to test the market – and asking yourself – what is the smallest and fastest product I can make to see if this business idea has any interest has a chance of finding a market?
What is a Minimum Viable Product?
That’s where a Minimum Viable Product (MVP) comes in, and why an MVP is so valuable. An MVP is a product with just enough features to attract early customers, and validate your customer assumptions early in the process. By building a lean MVP, you are risking and investing less of your limited resources, and you’re testing your product-market fit to ensure it’s something that people actually want and need. You can use the opportunity to get feedback in the sales process, and what prospective buyers like and dislike about your product.
Think about your minimum viable product as a test run. You’re providing value to a market, positioning the product as a solution to their problem, and seeing what happens, without spending a fortune to do so. The MVP development process gets you something of value to sell, but it’s not the final product – it’s the 1.0 version.
And that’s exactly what you want. Now you get to discover what works, what doesn’t, and iterate on the entire process – from your marketing messages to features to the user’s experience. This is a huge opportunity to further your market research and ensure your assumptions are in line with the demand. And if not, use this validated learning as an opportunity to further improve.
Minimum viable products are especially important in industries such as software, where it’s now common practice to iterate new versions based on user feedback – but can be applied to many industries. By using an MVP approach, you can make sure your product is on the right track before investing too much time and resources. No surprise this concept came from Eric Ries, author of The Lean Startup, himself a software engineer with a background in agile development and software development processes.
As a quick note: Even though it started in software development, we’re looking at minimum viable product from a general business ideas approach, where it can be applied to anything from a service-based business to a business that sells a single product. It’s a process that helps you better understand your market and the value you create within it.
Why should I start with a Minimum Viable Product for my business?
If you’re just starting up, a minimum viable product is critical as it prevents you from overleveraging your resources. When you understand a market’s problem and build a simple, understandable product to solve it, it’s much more likely to get you the feedback you need from those early users to refine the product and scale.
Another important reason to start with an MVP is to have a product released to the market as quickly as possible. In new industry, it can allow you to gain an early foothold in the market. More critically, it helps you begin generating revenue as soon as possible. Startups fail frequently, and usually this is because they’re not bringing in revenue – they’re a time and money sink that eventually spirals out as the owner gives up.
When you MVP, you test an idea with real users before committing a large budget to the product’s full development. You will learn what resonates with your market and what doesn’t, and be able to make the best decisions about the shape your company will take moving forward. You’ll learn quickly if a product won’t succeed, and have the feedback of users to fall back on to ensure you’ve identified the best way to solve the market demand.
Tips for targeting the right market while building an MVP
It’s impossible to develop great product lines in a poorly positioned market segment. Do your research, and always start with a clear understanding of your audience. Even the best product will fail if it doesn’t find the right target audience.
This means going back to your audience profile and asking yourself:
What are the pain points in this audience that my product solves?
What is the life-change that will result when they buy my product?
How can I design this product to have only the core features for the time being to ensure that product-market needs are met?
How will I gather customer feedback and use that in my iterative process?
What are the key things we want to learn from our audience in releasing our minimum viable product?
When you can answer these questions and position your product as the answer, you know you’re on the right track.
That doesn’t mean you should avoid planning ahead. Some of those questions to ask yourself are:
What is the eventual business model that will grow around this core final product?
How might the product and all the features evolve in a phase 2?
Great, so how do I create my Minimum Viable Product?
Start with three things in mind. Your audience, the problems you want to solve for them, and your overall business objectives.
Understanding a market means understanding their pain points, and core to your MVP you can start thinking through the specific solutions you want your product to offer users. These solutions, which you might write up as user stories or in a customer avatar, won’t necessarily define the product’s full vision, but start to provide a framework for the features and benefits the product should include. Remember, you want to focus on only the most critical functionality for your MVP – so think through what those features should be and narrow it down from there.
The goal is not to overdo it – it’s to test the market and generate starting revenue. You can come back to the full list and add additional features as the product evolves and after validating market fit. Look at your user research and competitive analyses, how quickly you’ll be able to iterate on certain types of functionality when you receive user feedback, and the relative costs to implement features to choose the most important ones.
Remember, the MVP should be focused on solving a specific problem or providing a specific benefit to a specific target customer.
On additional step before starting on your MVP is to weigh in your business objectives. Consider what your team or company’s strategic goals are. Are you working toward specific revenue numbers in the coming months? What resources are available to devote to the MVP versus other efforts? What do you want to learn about your audience in releasing the MVP that can be used to further refine the product?
Common mistakes when creating Minimum Viable Products (MVPs)
When designing minimum viable products, it is essential to keep remembering that you are trying to create the minimum product that solves a problem and creates value for your market. It’s tempting to include dozens of features or extra add-ons to “over-sell” and try to create overwhelming value, but this is typically a mistake. Feature creep increases your cost and the chances that your MVP is difficult to understand and take hold in a market.
Remember, the minimum viable product isn’t your final product. They’re a proof of concept – an early version that’s is available for customer testing rather than for production purposes. Anything that starts to increase the budget for production, the level of complexity of the product idea, or that could be confusing for your users is more than you should likely take on.
Make an MVP Plan and take action
Once you have identified the specific problems your MVP will be positioned to solve, it’s time to make a plan and take action. Methods vary, but generally your plan should include details such as milestones and timeline, budget, and resources needed to create the MVP. It should also include a go-to-market strategy to reach the target audience and a KPI (Key Performance Indicator) plan to measure the MVP’s success.
Be sure to build in a mechanism for customer feedback, such as a planned survey or direct outreach and interviews. Both positive feedback and negative feedback are helpful. It’s nice to hit a home run the first time you step up to the plate, but you especially want to hear about what’s missing or not working as expected. The data you get on this version 1 will help you refine and polish the product (and marketing!) so that you’re ready to release a version 2 to a broader group.
Typically these steps will be done by a combination of someone in marketing and someone in product development. You should delegate someone to “own” the oversight of the process if possible, as having one person that understands the big picture will be a huge benefit when collecting feedback and determining the next steps in your iteration process.
Get Started on your MVP Now
It’s time to start on your MVP. An MVP is a startup’s secret weapon, and will serve as a powerful tool for you to validate their product idea and ensure you invest your limited resources in something your future customers actually want and need.
Focus on building a product with just enough features to attract early customers and validate customer assumptions early in the process. With an MVP approach, you’ll test product-market fit and gather valuable feedback from early users, allowing you to refine the product before committing too much time and money to its full development. It allows you to release a product to the market quickly, test the idea with real users, and learn what resonates with your target market.
With a solid MVP in place, you’ll be well on your way to startup success.